As much as we work hard to give our families a good life and a better lifestyle, we also aspire to safeguard their future and ensure their well-being at all times. Now, most of us turn to savings and investments as the preferred route for wealth creation. But the fact is insurance can be a powerful option that not only yields good returns over a period of time, but also safeguards the interests of the family against unforeseen events. Offering the best of both worlds, insurance is a holistic savings-cum-security option for Indian families.
But what should you look for in an insurance plan, and how do you choose the right one suited to you from the bewildering number of policy options out there? You can chart your insurance journey by navigating the following check-posts:
Do your homework
As the industry has matured leading to the introduction of customised insurance solutions, life insurance has gone beyond covering an unfortunate eventuality or even being a vanilla tax-saving product. It has emerged as a financial needs-based investment option that yields significant returns during the lifetime of the insured and enables them to meet the certainties of life such as a child’s education or retirement.
When it comes to choosing a plan that’s the right fit for you, it is important to not only identify your financial goals, assess your liabilities, and risk appetite but to also do your homework on the market offerings. Understand all the facets of a plan – coverage, benefits, term, premium, returns –to identify the one that best suits your individual needs. Just as you would while buying a car or even refrigerator, also assess all the available options and compare various plans before making a choice.
Remember to compare apples to apples always. Look beyond the premium amount to the features, benefits, and provisions of a plan. The premium-paying period will depend on your capacity to pay, the age at which you buy the plan and the number of years you want to earn from it. Also consider the insurance company’s claims settlement ratio while making your choice.
Ask questions of the agent/company
Given the vast expanse and the diversity of our country, the insurance needs of our people vary depending on socio-economic, cultural, geographical, and other factors. Insurance is not a one-size-fits-all offering, and the customer should always find a plan that’s the right fit for them.
To ensure the right choice, one should seek detailed information from all available sources. While online resources can be helpful, a competent local insurance representative can provide all the requisite information to enable the right choice, as well as help through the entire lifecycle of the insurance journey – right from application and onboarding to regular payment of premium and settling of claims. They can hand-hold you, make you understand the various features of a plan and even help customise the plan with suitable add-on riders or benefits, such as accidental total disability, based on your needs.
Leading insurers like IndiaFirst Life Insurance have a vast network of trained representatives who can service customer needs right at their doorstep – from metros and urban centres to small towns and rural areas. The customer should not only resolve the queries to their satisfaction, but also adopt a ‘what’s in it for me’ stance to get an insurance product that would best serve them.
Be sure before you insure
While one should consider all factors before deciding on an insurance plan, the financial aspect remains a key consideration – both in terms of comfortable payment of premium as well as investment and coverage goals. Primarily, one should consider insurance as a priority and not as a discretionary allocation; the higher the premium, the more the long-term dividends – for the insured and the family.
While arriving at the coverage amount, one should consider what we call the ‘human life value’, which considers the insured person’s expected income over the coming years, the expected big expenses, and even the impact of inflation. A back-of-the-envelope formula for calculating human life value would include a sum assured of 10-15 times an individual’s annual income plus their liabilities such as home loan, car loan or personal loan minus liquid assets such as stocks, mutual funds, and fixed deposits. Today your requirement may be INR 1 crore, but if you take all these factors and inflation into account, after 20 years, you may need an amount of INR 5-crore – and the time to plan for it is now.
To sum up, choosing the life insurance plan that’s right for you involves:
- Identifying your financial goals
- Assessing your liabilities and risk appetite
- Comparing like-to-like plans offered by different insurers
- Getting your specific queries resolved by the insurer
- Calculating human life value or your family’s future financial needs
- Taking stock of your finances to arrive at the optimum premium
- Opting for a trusted insurer with a good claims settlement ratio
So, take your time to study all the information you need, get your queries answered by the representative and make an informed choice that will stand you and your family in good stead for life. Remember, your life circumstances and financial goals are unique to you. Hence, you must choose an insurance plan that best suits your individual needs and aspirations by asking all the right questions -- and by ensuring that you get all the correct answers. Choose an insurer that will efficiently serve your financial needs as well as stand with you and your family through thick and thin.
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